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Lord Brabazon of Tara moved Amendment No. 52:

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The noble Lord said: In moving Amendment No. 52 I should like to speak briefly to Amendment No. 53. We have reached the subject of the administrator.

Amendment No. 52 seeks to leave out the words "Secretary of State". As drafted, the clause allows the Secretary of State to make his choice of an administrator rather than leave it to the court. The amendment would restrict such a power to the CAA. Perhaps the Minister could explain why he feels that it is necessary for the Secretary of State to be in a position to appoint the administrator and why the CAA, which is, after all, the regulator in respect of licence holders, should not be allowed to exercise its powers without interference from the Secretary of State.

Amendment No. 53 seeks to ensure that any person managing the affairs, business and property of a licensee during the currency of an air traffic administration order is a competent person. The making of an air traffic administration order is a serious step and one which I hope never occurs. However, if one looks at the circumstances under which a court would have to make such an order under Clause 28, the licence company in question would either be in extreme financial difficulties or would have failed to carry out a Clause 8 duty. The duties under that clause include, of course, securing a safe air traffic control system.

The amendment is designed to ensure that the choice of person made to manage such a company's business and property would not be the decision of the Secretary of State and the CAA alone but that the court would be given power to satisfy itself of the suitability of the person proposed. In a case of insolvency, the most obvious choice would be an insolvency practitioner. However, it is questionable whether any insolvency practitioner would have the necessary day-to-day experience of running part of an air traffic system. Equally, a person with such experience might not be the most appropriate person to carry on the financial aspects of a licensed company's business. A combination of persons might be required.

The amendment would allow the court to be the ultimate safeguard of the public's interests in this area and ensure that the executive had considered the best solution in all the circumstances. I beg to move.

Lord McIntosh of Haringey: The noble Lord, Lord Brabazon, is of course right to say that these clauses deal with extreme circumstances. I join with the noble Lord in saying that I hope they never occur. Here the Bill addresses what would happen after the hearing of a winding-up petition and an air traffic administrator needed to be appointed.

Amendment No. 52 seeks to remove the right of the Secretary of State to nominate an air traffic administrator and leave the matter entirely to the CAA. It is inconceivable, if we reached such a dreadful point where it became necessary to make an

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administration order, that the Secretary of State and the CAA would not be involved in detailed discussions.

Part of those discussions would of course include who would be best suited to take over the running of NATS for the duration of the order. Both the CAA and the Secretary of State would have a contribution to make to that decision. For that reason, the clause is drafted to provide for the nomination to be made jointly. It recognises and reflects the process of consultation that the Secretary of State and the CAA will inevitably go through in those circumstances.

These would be matters of very great public concern. I cannot imagine a Secretary of State appearing before Parliament and saying, "It's got nothing to do with me, guv". Clearly the Secretary of State would have a legitimate interest in the identity of the administrator. The administrator would effectively stand in the shoes of the licence holder's management; it is analogous to the granting of a licence. The Secretary of State is the person to grant licences, after consultation with the CAA, or who consents or gives an authority to the CAA to grant licences. It therefore makes sense that he should be involved in the decision to nominate the administrator.

I was interested to listen to the arguments advanced by the noble Lord, Lord Brabazon, in support of Amendment No. 53. One of the reasons why the Bill provides for the Secretary of State and the CAA to nominate the administrator is that it is essential for a suitable person to be identified and appointed. I take entirely the point made by the noble Lord about the need to appoint someone who would be competent to run the business rather than being necessarily an insolvency practitioner. I shall quote what the noble Lord said in that regard when we reach the later stages of the Insolvency Bill. His colleagues have been arguing the opposite case.

Clearly, the nominee must be a person that the CAA and the Secretary of State are confident is perfectly capable of discharging the air traffic administration order. Frankly, the court would turn back such a challenge. It would say, "It is up to you to find the right person". This is not a matter for the court. It has no capabilities as regards undertaking the vetting process implied by the amendment.

Baroness Thomas of Walliswood: Before the noble Lord, Lord Brabazon, replies to the remarks made by the Minister, can he tell me whether he will take on board the suggestion made by the noble Lord, Lord Brabazon, that two people might need to be appointed? I understand that a person with specialist skills would be needed to run such a particular business. However, the business of insolvency is also

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complicated. The Secretary of State might find it difficult to locate all that expertise combined in one person.

Lord McIntosh of Haringey: I should have thought that it would be not only two people but that it could very well be a team. Under certain circumstances, it could even be a company.

Lord Brabazon of Tara: I am grateful for the Minister's reply and also for the intervention of the noble Baroness, Lady Thomas. Having listened to the Minister's remarks, I presume therefore that the word "person" used in the phraseology of the Bill denotes more than one person.

Lord McIntosh of Haringey: A "person" used in this sense is not restricted to a natural person.

Lord Brabazon of Tara: I shall take the word of the noble Lord on that point. However, I am now a little worried about the amendments. The Minister has threatened to quote me in other proceedings that are due to come to your Lordships' House. I shall have to ensure that I am not in the House on that day. Nevertheless, the exchange has been helpful. I hope that such an event never takes place. I think it unlikely, given the safeguards that will be in place. However, in case it does, it is useful to have clarification on what might happen. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Amendment No. 53 not moved.]

Clause 27 agreed to.

Clauses 28 to 30 agreed to.

[Amendment No. 54 not moved.]

Schedules 1 and 2 agreed to.

Clauses 31 to 33 agreed to.

Schedule 3 agreed to.

[Amendment No. 55 not moved.]

Clause 34 agreed to.

Clause 35 [Register]:

[Amendment No. 56 not moved.]

Clause 35 agreed to.

Clause 36 agreed to.

Schedule 4 agreed to.

Clause 37 agreed to.

Schedule 5 agreed to.

Clause 38 [Directions in interests of national security etc.]:

[Amendments Nos. 57 to 60 not moved.]

Clause 38 agreed to.

Clause 39 [Directions relating to the environment]:

[Amendments Nos. 61 to 65 not moved.]

Clause 39 agreed to.

Clause 40 agreed to.

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Clause 41 [Meaning of transfer scheme]:

[Amendment No. 66 not moved.]

Clause 41 agreed to.

Clause 42 [Transfer schemes: supplementary]:

9 p.m.

Lord Brabazon of Tara moved Amendment No. 67:

    Page 28, line 12, at end insert ("provided that the rights of any third party are not adversely affected by any such transfer or assignment or such third party consents to the transfer or assignment").

The noble Lord said: In moving this amendment, perhaps I may speak also to Amendments Nos. 89 and 92. The amendments deal with transfers.

Clause 42(1)(a) creates a power to transfer anything, including a liability, which would not otherwise be capable of being transferred or assigned. The amendment requires the consent of any third party adversely affected by such transfer.

A third party may have entered into a contract with the CAA as an arm of government in good faith, expecting and entitled to expect that contract to remain with the CAA unless consent was given to a transfer. A contract with a private/public partnership company might have been made on different terms.

A statute should not be used to override any private law right of a third party. It is not good enough to have the Government or the CAA dictate how such rights are to be dealt with; third parties should not be forced to relinquish any rights against their wishes. That is the purpose of Amendment No. 67.

Amendment No. 89 relates to Clause 53. It is right that Parliament should be informed of any default under a guarantee given by the Treasury or the Secretary of State, but information alone is not sufficient. This amendment requires the reasons for the default and the steps to be taken to recover the sums outstanding to be included in that statement.

Government carry the responsibility for giving the guarantee in the first place. Proper risk assessment and monitoring of the financial position of the guarantor should ensure that a default is avoided. If government allow a default to occur, none the less it is not good enough for Parliament just to be told of it; Parliament needs to know what government will be doing to rectify the situation.

The last amendment in this group, Amendment No. 92, relates to Clause 57. It seeks to delete subsection (4). The subsection enables the Secretary of State to give a direction to the CAA in connection with a transfer scheme even if complying with that direction would put the CAA in conflict with its duties under the Act. This amendment removes the power of the Secretary of State in those circumstances.

The duties of the CAA under the Act, especially in Clause 2, provide the fundamental framework within which it must act. It should not be possible for the Secretary of State to override it on the arbitrary basis allowed by the provision in subsection (4). The duties of the CAA anyway reflect the duties of the Secretary

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of State as set out in Clause 1 and the Secretary of State should not find himself in the position of being able, within his own powers, to give a direction which overrides the duties of the CAA. If the clause is designed to meet a specific problem, that should be spelt out and specific provision should be made in the Bill. I beg to move.

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